China Insurance International Holdings Company Limited 2003 ANNUAL RESULTS 24 MARCH 2004

Transcription

1 China Insurance International Holdings Company Limited 2003 ANNUAL RESULTS 24 MARCH 2004

2 Contents Financial Summary Reinsurance Business Review and Outlook China Insurance Group Assets Management Limited ( CIGAML ) PRC Insurance Market Review Tai Ping Life Insurance Tai Ping Insurance Investment Portfolio Review and Outlook Conclusion 2

3 CIIH Corporate Structure The Public China Insurance (PRC) 100% China Insurance (HK) ICBC (Asia) 24.9% Fortis 35.98% 54.56% 9.46% 24.9% 100% 100% 100% 25% 50.05% 30.05% China International Reinsurance Co. Ltd. Sino-Re Reinsurance Brokers Ltd. China Insurance Group Assets Management Ltd. (CIGAML) Huatai Insurance Agency & Consultant Co. Ltd. Tai Ping Life Insurance Co. Ltd. (TPL) The Tai Ping Insurance Co. Ltd. (TPI) 3

4 Financial Summary

5 2003 Annual Results For the year ended 31 Dec Restated % HK$'000 HK$'000 Change Turnover 4,329,955 2,769, Resinsurance Underwriting Result 43, , Life Insurance Result (121,711) (33,284) Income from Asset Management Business 56,169 27,316 * Income from Insurance Intermediaries 14,661 15, Other Revenue & Income 395,558 94, Profit from operations 162, , After-tax Profit Attributable to Shareholders 140, , Earnings Per Share 10.6 cents 14.0 cents Dividend Per Share 2.4 cents 3.0 cents N/A * Business a cquired by CIIH in July

6 Breakdown by Line of Business Insurance Life Asset Intermediaries Reinsurance Insurance Management Business Unallocated Total HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 Turnover 1,179,622 3,079,503 56,169 14, ,329,955 Segment results 43,635 (121,711) 56,169 14,661 0 (7,246) Other revenue 98, ,454 16,383 1,055 12, ,276 Other net income/(loss) 91,161 19,485 15,514 3,180 21, ,282 Administrative expenses (14,694) (183,372) (25,882) (4,454) (25,207) (253,609) Net exchange gains/(losses) 25,905 1,795 (836) (478) 1,403 27,789 Profit/(loss) from operations 244,918 (168,349) 61,348 13,964 10, ,492 Share of (losses)/profits of associates (TPI) (60,719) (60,374) Profit attributable to shareholders 234,027 (91,250) 47,353 11,947 (61,324) 140,753 6

7 Key Factors Behind Results Strong performance despite challenge from SARS in the region Reinsurance business had strong earning contribution HK$234.0 million, an 17.2% increase from HK$199.7 million in 2002 (restated) Satisfactory Performance from Asset Management and Reinsurance Intermediaries TPL and TPI aggressive expansion with greater breadth of operation in China. As expected, they incurred operating losses in line with budget Rapid expansion of new branches attributed to big increase of TPL s s administrative expenses by approximately HK$100 million over the previous year 7

8 Reinsurance Business Review and Outlook

9 Strong Earning of CIRe Underwriting profit reduced to HK$43.64 million, from HK$ million of previous year (restated) due to some major claims such as SARS, Korean typhoon Maemi and Tuen Mun Highway bus tragedy Investment income reached HK$ million, a strong 291% growth h from HK$48.51 million in 2002 Encouraging operating result HK$234.0 million producing a favourable ROE of 20.4% Most Encouraging Reinsurance Profit HK$ mn % (Restated) 9

10 CIRe Underwriting Performance CIRe - General Reinsurance Underwriting Performance General and Life Reinsurance combined (HK$'000) A/C Year restated AA* AA Gross premium GPW 1,179,621,909 1,170,637,441 Retained premium NPW 972,839, ,877,100 Retained earned premium NEP 1,014,074, ,422,311 Retained ratio - NPW/GPW 82.5% 81.8% Earned ratio - NPE/GPW 86.0% 81.7% Net claims incurred NCI 723,309, ,612,256 Net U/W expenses 228,013, ,154,890 Management expenses 19,116,319 18,344,632 Total expenses TE 247,130, ,499,522 Loss ratio - NCI/NEP 71.3% 58.7% Expense ratio - TE/NPW 25.4% 25.4% Combined ratio 96.7% 84.1% U/W results 43,634, ,310,533 Life assurance fund 2,608,896 1,740,290 Unearned premium reserve 302,130, ,233,482 Outstanding claims provision 1,390,481,877 1,169,046,155 Technical reserve 1,695,221,339 1,515,019,927 Shareholders Funds SF 1,252,480,095 1,044,520,943 Solvency Ratio - NPW/SF 77.7% 91.7% 10

11 Satisfactory Performance of Insurance Intermediary Brokerage turnover at SINO-RE slightly reduced to HK$14.7 million from HK$15.3 million in 2002 Profit contribution increased to HK$11.6 million, an increase of 16% from HK$10 million in 2002 Reduction in brokerage income attributed to restructuring of several eral core reinsurance programs by major ceding clients Improved investment returns 11

12 Outlook on Reinsurance Underwriting Global reinsurance industry is showing signs of peaking CIRe has re-evaluated evaluated and re-underwrote its business with the more intense focus on underwriting profitability and risk-control of catastrophe exposures After two years of rapid growth in premium income, premium growth has slowed down aiming at better underwriting margin CIRe prioritizes profitable growth; Improved ratings from S&P of A- (Strong), AM Best A- (Excellent) and Fitch A- have provided CIRe with better access to quality business 12

13 China Insurance Group Assets Management Limited ( CIGAML )

14 CIGAML Future Opportunities for a New Business Line CIIH acquired 100% of CIGAML in July 2002 Acquisition of asset management operations complements core insurance businesses Investment expertise for management of insurance funds Expansion opportunities into Mainland China will be pursued in time provision of third-party asset management services (e.g., mutual funds, institutional accounts) 14

15 CIGAML Immediate Financial Contribution to CIIH Management fee attributable to the Group amounted to HK$56.17 million; net profit attributable to the Group amounted to HK$47.35 million Assets under management of CIGAML amounted to HK$3, million as of 31 December,

16 PRC Insurance Market Review

17 Changes in Regulatory Framework and Business Environment The Regulator has become more sophisticated in policy making and supervision. Solvency ratio, among other financial measures, will be adopted as the major benchmark in supervising the insurance industry Investment channels are widening, i.e. doubling of the ceiling on investing in corporate bonds from 10% to 20%; insurers are also encouraged to improve their investment management capabilities by setting up separate investment management units The IPOs by major insurers should help to reform the industry, creating a more healthy competitive environment, improving transparency and corporate governance Major life insurers declared lower than expected policyholder bonuses for 2002, reflecting actual/realistic investment returns and an increased focus by the major insurers on potential profitability and risk control, on the other hand, lower bonuses have resulted slowing down of bancassurance growth 17

18 Tai Ping Life Insurance

19 TPL Business Performance 2003 (First Year Premium) Unit: RMB mn 3,600 3, ,000 2,400 2, ,800 1, Individual Group Bancassurance Company 19

20 2003 Market Share Analysis in Beijing, Shanghai, Guangzhou and Chengdu Comparison with Peers Unit: RMB mn Company China Life Ping An China Pacific New China Life Taikang Tai Ping Life Total Premium Income Tai Ping Life s Market Share Shanghai 6, , , , , , % Beijing 4, , , , , , % Guangdong 12, , , , % Chengdu 5, , , , % Total 29, , , , , , , % 20

21 TPL Booked Premium 2003 (First Year Premium) Branch Shanghai Beijing Guangzhou Chengdu Shenzhen Zhengzhou Qingdao Hangzhou Jinan Dalian Nanjing Shenyang Shijiazhuang Ningbo Foshan Total (By Category) Individual Remark: In-force Premium is RMB3, Group Bancassurance , Unit: RMB mn Total (By Branch) 1, ,

22 TPL Written Premium as of 19 March 2004 Branch Individual Group Bancassurance Unit: RMB mn Total (By Branch) Shanghai Beijing Guangzhou Chengdu Shenzhen Zhengzhou Qingdao Hangzhou Jinan Dalian Nanjing Shenyang Shijiazhuang Ningbo Foshan Total (By Category) ,

23 TPL Underwriting Result (HK$'000) Ratio to Ratio to 2003 N.Prem 2002 N.Prem Gross premiums written 3,079,503 1,556,489 Net premiums written (less R/I premium) 3,070,539 1,532,469 Increase in Life assurance funds (2,710,679) 88.3% (1,405,102) 91.7% Net claims Incurred (21,685) 0.7% (3,208) 0.2% Net commission expenses (219,768) 7.2% (65,483) 4.3% Management expenses (170,896) 5.6% (88,167) 5.8% Surrender (68,461) 2.2% (3,551) 0.2% Transfer to insurance protection fund (761) 0.0% (242) 0.0% U/W profit (Loss) (121,711) 4.0% (33,284) 2.2% 23

24 Tai Ping Insurance

25 TPI Reducing Dependence on Motor Insurance and Diversifying into other classes of Business Total Premium for 2002: HK$234.8 million Total Premium for 2003: HK$495.5 million Non-Marine 27% Marine 8% Non-Marine 33% Marine 10% Motor Vehicle 65% Motor Vehicle 57% 25

26 Investment Portfolio Review and Outlook

27 Our Conservative Investment Portfolio (Hong Kong Fund) At 31/12/2003 % of At 31/12/2002 % of HK$million Total HK$ million Total Bonds & Fixed Income Securities 2, % 1, % Cash & Bank Deposits 1, % 1, % Listed Equities % % Listed Unit Trust and Mutual Funds % % Investment Properties % % Interest in Associates % % Unlisted Equities % % Loan % % Total 4, % 3, % Total 2003 Investment Income for HK Fund was HK$260.7 million Annualized 2003 Return on Investment was 6.7% p.a. on HK Fund 27

28 Investment Portfolio Review (TPL) At 31/12/2003 % of At 31/12/2002 % of HK$ million Total HK$ million Total Bonds & Fixed Income Securities 2, % % Cash & Bank Deposits 1, % % Listed Unit Trust and Mutual Funds % % Securities purchased under Repurchased Agreement % % Loan % - 0% Total 4, % 2, % Total Investment Income was HK$134.9 million in 2003 Annualized 2003 Return on Investment 3.9% p.a. 28

29 Investment Outlook for 2004 For steady recurring yield and asset liability matching, major part of investment portfolio will still be in investment grade fixed income securities for long term holding Equity investment will be handled with caution whilst performance may be less bullish than 2003 Exposure to interest rate increases will be carefully managed Optimistic long-term outlook with its cash in hand readily available for investment when opportunity arises 29

30 Conclusion Diversified business profile International standard of corporate governance Exposure to upside potential in PRC market Best of breed partners Strong capabilities in all lines of insurance business, including reinsurance, insurance brokerage, asset management, life insurance and general insurance Main focus on Hong Kong and the PRC, with some reinsurance business from other parts of Asia and the rest of the world Simple and strong corporate structure No history legacy of negative spread products Rigorous focus on shareholder value Unyielding resolve on transparency and integrity in financial report and operational management Centralized underwriting, investment and risk control system Under-penetration of insurance and strong GDP growth in the PRC should ensure sustainable growth TPL and TPI have national licences in the fast growing PRC market TPL and TPI have been expanding their network in the PRC insurance market Bancassurance channel bolstered by ICBC accounted for 81.1% of TPL sales in 2003 Fortis provides capital, actuarial and bancassurance knowhow and international best practice standards Strong relationship with and support from CIHC and CIHK 30